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V1122-19 22 May 2019 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · deducción por inversión en vivienda habitual

Refunds due to void clauses are not income, but require repayment of primary residence tax relief

A taxpayer has enquired about the tax treatment of money refunded following the annulment of mortgage loan clauses. The Tax Agency has responded that the refunded amount does not constitute income; however, it does require the regularisation of tax relief claimed for the primary residence if those funds were used for that purpose.

The question raised

1. Tax treatment of the reduction in the outstanding amortizable capital of the loan and the amount credited to their account.

The DGT's ruling

The restitution of overpaid amounts due to null and void clauses does not constitute income subject to Personal Income Tax (IRPF). However, if such amounts formed part of the basis for the deduction for investment in the primary residence, the right to the deduction is lost and the tax situation must be regularized. Compensatory interest derived from this refund is considered a capital gain and is included in the savings tax base. In the event of an adverse costs order, the amount received constitutes a capital gain that is included in the general tax base.

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